China’s September auto sales plunge, two major causes exposed

As the global chip shortage continues and China pulls the plug on power outages, China’s auto sales plunged 19.6 percent in September from a year ago and have fallen for the fifth straight month, while the third quarter of the year also saw a 13 percent drop from a year ago. However, U.S. new energy car maker Tesla’s sales in China have received a significant boost.

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September and October are the peak months for auto sales in China, hence the term “Golden Nine and Silver Ten. But data released Tuesday (Oct. 12) by the China Association of Automobile Manufacturers (CAAM), which sells cars in China, showed that in September, China’s car sales were 2.07 million units (of all types), a year-on-year drop of nearly 20 percent.

The association said the drop in auto sales was due to a power shortage caused by a lack of power generation due to coal constraints, coupled with a global chip supply crunch that has lasted for a long time, forcing many major car makers to shut down or cut production.

However, the association added that China’s chip supply crunch had eased in September and expects supply to continue to improve in the last three months of the year, although some constraints remain.

Reuters reported that a bright spot in auto sales in September was the more than doubling of sales of new energy vehicles (New Energy Vehicles, NEV) to 357,000 units, including electric vehicles, hybrid vehicles and hydrogen fuel cell vehicles.

Tesla, the U.S. electric car maker, has emerged as a leader at a time of generally softening auto sales. Tesla sold more than 56,000 units of its Model 3 sedan and Model Y sport-tool utility vehicle (SUV) made in Shanghai in September, a two-year high for Tesla and a 27 percent jump from August’s 44,264,000 units on.

An official from the China Association of Automobile Manufacturers said sales of new energy vehicles could reach 3 million by 2021, far exceeding last year’s 1.4 million units.

Japan’s largest automaker Toyota’s September car sales in China plunged nearly 36 percent from a year ago to 115,000 units, down 11.9 percent from August, according to Kyodo News. Honda’s September sales in China, on the other hand, fell 28.1 percent to 121,448,000 units. Nissan Motor Co. sold 104,443,000 vehicles in September, down 26.2 percent.

Reuters said Japanese auto companies operating in China may continue to be plagued by chip shortages, which are expected to last at least through the end of the year.